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    CMF Issues Rule on ESG Disclosures and Tool to Compare Mortgage Loans

    November 26, 2021

    The Commission for the Financial Market (CMF) in Chile released its new mortgage loan simulator as well as the General Rule No. 461, which incorporates sustainability and corporate governance issues in the annual reports of supervised financial institutions. The rule aims to ensure that supervised entities report their policies, practices, and goals adopted with respect to the environmental, social and governance (ESG) matters. The rule applies to entities such as banks, insurance companies, issuers of publicly offered securities, general fund managers, and stock exchanges. CMF also published a regulatory report that evaluates the impact of the new rule, along with the frequently asked questions (FAQ), a brochure, and a presentation on the new rule.

    The mortgage loan simulator from CMF allows users to quote and compare the costs of housing loans at the supervised entities—for a housing loan of up to UF 20,000 (UF refers to the Chilean unit of account). To ensure comparability, the simulation uses offers of non-endorsable mortgage loans (entities finance the loan with their own resources and it cannot be transferred to third parties) calculated in the Chilean unit of account (UF) with a fixed interest rate. On input of the information on the amount to be requested and the payment terms, users can compare interest rates, monthly installment values, and mandatory insurance costs among financial institutions that grant a particular type of loan. Reported rates apply to a standard product with the following features:

    • The loan amount equals 75% of the property value.
    • The property to be financed is in the Santiago Metropolitan Area.
    • In the case of insurance (fire, or fire plus earthquake), it is assumed that the property's full appraisal value, minus the land, is insured.
    • The interest rate is expressed annually, in arrears, and on a 360-day basis.

    To use the tool, people must complete the simulator information by entering the amount in the UF they request (with a maximum of UF 20,000) and the payment term. The provided results are strictly for reference and do not constitute an analysis of the credit score of a user. Before granting a loan, each financial institution must evaluate the credit risk of its clients. Therefore, interested parties should consult with each institution directly to learn about the conditions and specific characteristics of financial products.


    Related Links (in English and Spanish)

    Keywords: Americas, Chile, Banking, Insurance, Securities, Disclosures, ESG, Annual Report, FAQ, Lending, Credit Risk, Governance, Mortgage Lending, Consumer Lending, CMF

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